Tuesday, October 26, 2010

Halloween Horror Special XIII: Mean Green Mother from Outer Space

I think I finally understand Keynesian economics. Frightening as that thought is, it's an essential first step in helping people to understand the alternative that the natural law, social justice, and binary economics offers. Integrating binary economics, the Just Third Way has the potential to remedy the massive and seemingly unavoidable problems caused by reliance on Keynesian economics as the ideal model for global economic, financial, and political systems.

First, of course, Keynesian economics is directly contrary to the precepts of the natural moral law. It effectively abolishes private property and free association, calls into question the right to life, and redefines what it means to pursue happiness, that is, acquire and develop virtue. In Keynesian economics, the ordinary human person is reduced to the status of "homo œconomicus," that is, a purely economic unit whose human needs may be satisfied with a bare modicum of material goods, but whose wants are insatiable. (This actually contradicts the Theory of Marginal Utility, but it's not clear that Keynes was ever completely consistent in anything.)

The observation that Keynesian economics is directly contrary to the precepts of the natural moral law leads to a breakthrough realization. That is, Keynesian economics is not from this earth. Keynesian economics is from another planet.

Does this mean that Keynes was himself an alien being, and that Will Smith and Tommy Lee Jones failed in their mission to protect the earth from the scum of the universe? It would make sense, but (reluctantly) our in-depth study of Keynes and his thought reveals something even more sinister.

Keynes was an unwitting dupe of a highly evolved vegetative conspiracy intended to turn humanity into plant food. This was first chronicled by Roger Corman and Charles B. Griffith in the 1960 fact-based allegory, The Little Shop of Horrors. The film was discredited, first by changing the title from the more descriptive The Passionate People Eater, then by spreading the rumor that Corman and Griffith wrote the script overnight while drunk and filmed the movie in two days.

When the message failed to penetrate the inner sancta of academia and politics, it was remade into an off-Broadway musical and then into another documentary in an all-out effort to wake people up. Since the situation had only gotten worse in the interim, the message was made more explicit, as can be seen in this clip, in which one of the alien beings reveals why it has duped Keynes into promoting a economic principles and theories that bear absolutely no relation to reality. The alien tells the character representing Keynes (played by Rick Moranis) that the goal is world conquest. Humanity is simply a source of food for the aliens, and the sooner civilization is destroyed by "Keynesian" economics, the better.

The one bright spot is that, between 1960 and 1986 when the second effort was released in theaters, Louis Kelso and Mortimer Adler wrote The New Capitalists, with a subtitle that gives the human race the ultimate solution to the "slavery of savings" into which Keynesian economics has bound the human race: "A Proposal to Free Economic Growth from the Slavery of [Past] Savings."

Serious students of the cinema will immediately understand the significance of the "electrical" jolt that binary economics gives to Keynesian economics, blowing apart its complete reliance on past savings, and ending the alien threat represented by Keynesian economics. Of course, since (as Father William Ferree pointed out in Introduction to Social Justice), the work of social justice is never done, the very end of the film reminds us to remain vigilant lest Keynesian economics once again grow up among us.

Nowhere is the alien nature of Keynesian economic better illustrated than in the way it relies on inflation and consumer credit to run an economy. There is no other way to explain how, in an economy that has the capacity to produce far more than is necessary to provide a comfortable living for everyone, there is want, even desperate need. How can that be? Because the alien idea has intruded that the only way to finance new capital formation is by cutting consumption and saving.

The problem is that the rich are already saving, in fact, their savings are already invested in new capital (and, of course, old capital). Where do we get the additional savings?

From wage workers. Through artificially induced inflation, prices for wage workers go up. This forces wage workers to cut consumption, thereby generating the savings necessary to finance new capital formation. The savings are passed on to producers in the form of profits, thereby putting the money into the hands of people who will use it for reinvestment rather than consumption.

This, however, means that "the economic dilemma" kicks in. Without the savings generated by cutting consumption for financing, there will be no new capital formed. At the same time, without the consumption to provide the incentive for producers to invest in new capital, there will be no new capital formed — people do, after all, have to buy the goods and services produced.

Or do they? Keynesian economics stipulates that when people are unemployed and not producing, they should be put to work producing goods and services that cannot be marketed! The sole purpose of this useless production is to generate effective demand without increasing the supply of marketable goods and services. Why must you not increase the supply of marketable goods and services? Because that drives prices down, and you need to drive prices up in order to force people to cut consumption! In Keynesian economics, you're better off if you produce nothing and the State just prints money and gives it to you.

The problem is that there's only so much in the way of unmarketable goods and services you can produce before things start to fall apart. The answer? Consumer credit. Consumer credit increases effective demand without producing any good or service, marketable or unmarketable. The downside is that, in the long run, borrowing today requires that you repay tomorrow. Eventually that means that the income you get tomorrow cannot be saved, because it was spent today, or yesterday. It can't be saved because it was already consumed.

The only way out is for consumers overburdened with debt to declare bankruptcy. True, this stiffs the producers that sold on credit, but the government can bail them out. It also gives the consumers a clean slate so they can borrow more money, then declare bankruptcy again, while the government creates more money to bail out producers.

Is there any question but that this is an alien conspiracy? The plant alien in Little Shop of Horrors made this perfectly clear with its demands to be fed constantly on the life's blood of humanity, an obvious allegory for the misuse of credit, the life's blood of the economy, with the goal of world conquest.

Of course, we could also just get rid of the whole Keynesian shtick and go with a more common sense solution, say, Capital Homesteading. Or is that just too wild and unbelievable compared with the surreality of Keynesian economics?